Here’s the small miracle of 2024: Despite Washington’s ideological and partisan divisions, the House of Representatives came together late last month to do exactly that. On a vote of 357 to 70, the House expanded the child tax credit as part of a bill that also extended some business tax breaks.
Memo to members of the U.S. Senate: You can be proud of having ratified aid to Ukraine and — especially after the shameful death of Russian dissident Alexei Navalny in an Arctic prison — the House should follow your lead. But if the remarkably dysfunctional House GOP majority can join Democrats to improve the tax credit, surely you don’t want to be the place where incremental progress goes to die. When the Senate comes back into session at the end of the month, passing this bill should be a high priority.
Of course, it would be far better if Congress restored the full child tax credit enacted in 2021. Rarely has there been a more effective social policy, and rarely have we seen so clearly the costs of ending it.
In 2018, child poverty stood at 13.7 percent. In 2021, with the child credit in full effect, it dropped to 5.2 percent. But when the credit expansion expired, child poverty leaped back up to 12.4 percent in 2022.
Nonetheless, the House bill does have the virtue of focusing its benefits on the poorest families. The Center on Budget and Policy Priorities, which advocates on behalf of lower-income Americans, estimates that the new version would benefit roughly 16 million of the 19 million children who receive less than the full child tax credit because, perversely, their families’ incomes are too low. The CBPP estimates that at least half a million children would be lifted above the poverty line when the proposal took full effect.
For instance, a single mother with two children who earns $13,000 annually working part time as a home health aide would see her credit rise by $1,575 in the first year alone. It was one of many examples the CBPP cited to show how a modest investment of public money could make a large difference in the lives of struggling families.
It’s true that the compromise negotiated between Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason T. Smith (R-Mo.) also includes business tax benefits, including enhancements of the breaks for research and development and for investment in new equipment.
Some progressives are uneasy about this deal, since the Trump-era tax cut reduced corporate taxes by even more than corporations asked for. Progressives are right that the corporate rate should be higher. But most in their ranks have concluded that this is no reason to kill progress for low-income families, especially since the measure is paid for by eliminating a pandemic-era business tax break.
Sen. Sherrod Brown (D-Ohio), a leading champion of a generous child tax credit, sees some of the business tax cuts as restoring incentives for investment that the earlier Republican tax bill eliminated. In an email, he called the deal “a win-win for Ohio parents and for Ohio manufacturers” that would help 575,000 children in his state.
More problematic is the red-herring objection to the legislation’s “lookback” provision, particularly from Sen. Mike Crapo of Idaho, the ranking Republican on the Senate Finance Committee. Under the bill, if a family’s income drops, it could use its previous year’s earnings to qualify for a larger tax credit. Crapo and other detractors see this as a disincentive to work.
These critics claim that low-income people would stop working and cut their incomes just to take advantage of this modest benefit. That notion is absurd, as Ryan Ellis, president of the conservative Center for a Free Economy, explained on X (formerly Twitter). “No one is going to zig zag in and out of the workforce every year just to get a partially refundable child tax credit,” he wrote. “That’s silly.”
Joshua McCabe of the center-right Niskanen Center was equally skeptical: “The idea of some parents gaming the system by jumping into and out of work every other year defies common sense and what we know about the hiring process.”
The fact is that if this bill gets to the Senate floor, it will pass, not only because business groups want the tax breaks but also thanks to an admirable rallying of social conservatives, including leading antiabortion voices, to the cause of children.
We need far more of this sort of politics. Helping lower-income families shouldn’t be an ideological thing. It’s simply the right thing.
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